If using dried mushrooms, cover them with water to hydrate and set aside.
Clean the meat of any nerves or tendons and cut into chunks. Season the meat with salt and pepper, then toss in flour and shake off any excess.
Heat the olive oil in a heavy pot over medium heat, then add the meat and brown it on all sides. Reserve the meat on a plate for later.
Sauté the onion and carrot in the same pot and oil until both are softened and golden. Add the garlic and sauté for 30 seconds, or until fragrant. Add the tomato paste and herbs, and sauté for about a minute.
Add the meat to the veggies along with any juices that were released and cover with the diced tomatoes, red wine, and sherry or port. Bring to a boil, then simmer until the liquid has reduced by half.
Add the beef stock and rehydrated mushrooms, making sure the meat is fully covered. Cover the pot and simmer for about an hour, stirring occasionally.
To make the picada, put all of its ingredients in a blender or food processor and pulse until it makes a smooth paste. Stir the picada into the stew, a spoonful at a time. Add to taste; some like only a little of the picada because of its strong flavor.
Once the meat is tender and the stew is ready, sauté the fresh mushrooms in a frying pan with a little bit of olive oil and salt and pepper.
Add the sautéed mushrooms to the stew and heat through, then serve and enjoy! I love fricandó with a side of rice or mashed potatoes; pasta, roasted potatoes, or homemade french fries are great too!